BMHC may cut 2,000 jobs

May 13, 2008

Shedding more light on its plans to consolidate operations, Building Materials Holding Corp. (BMHC) filed a document yesterday with the Securities and Exchange Commission that announced its intention to shut down an undisclosed number of underperforming units. These locations were divided into two groups: those identified for possible consolidation, representing aggregate sales of $435 million and operating income of $11 million in 2007; and units slated for potential shutdown, which brought in $120 million in sales last year but incurred operating losses of $12 million. The two groups employ 1,300 and 700 people, respectively.

No locations were given for the targeted closings and consolidations.

According to the SEC filing, BMHC is still evaluating its operations to resize the company. On Monday, the San Francisco-based pro dealer announced it was integrating its two business units, BMC West and SelectBuild, into one organization with combined back office functions. The company expects to realize $20 million to $25 million in savings from its streamlining efforts.

BMHC has also decided to realign its 13 regions into 7 regions. Missing from the list is the Mid-Atlantic, where SelectBuild entered the market through an acquisition in 2003 and provided framing services to home builders in Delaware, Maryland and Virginia. BMHC could not be reached for comment on its plans for the Mid-Atlantic region.

On a quarterly earnings conference call with analysts yesterday, company chairman and CEO Robert Mellor said the closures and consolidations will begin this week and probably finish within six months. “We’ve taken teams and put them in place [where] we’re winding down our business,” Mellor said. The industry’s 4th largest pro dealer reduced its work force by 20 percent during the last quarter of 2007, when it laid off 2,700 employees at SelectBuild and 300 people at BMC West, according to Mellor.

In addition, BMHC has announced plans to close two of its BMC West locations, in Merced and Bakersfield, Calif. The company will retain its existing sales force and continue to serve those markets from its BMC West units in Fresno and Modesto.

In a prepared statement, the company blamed the declining housing starts in California’s Central Valley as the reason for the consolidation.

The San Francisco-based dealer also announced it was closing its SelectBuild unit in Tucson as part of a company-wide integration of its two business units, BMC West and SelectBuild, into one organization. A number of underperforming units will be closed over the next six months as part of this consolidation, the company said, although the exact number and locations were not revealed.